This past Saturday, February 20, 2016, Le Parisien/Aujourd’hui en France revealed the contents of an internal UBS memo that discussed “navigating below the radar screen” to grow its business by enticing French clients to hide their money in Swiss bank accounts. The memo indicates that “UBS was perfectly aware of the risk” of its illegal practices.
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On July 6, 2015 the Internal Revenue Service’s Whistleblower Office released its Report to Congress for the fiscal year ending September 30, 2014.

According to the report, in 2014 the Whistleblower Office received more claim submissions than in any other year. The total claims received in 2014 were 14,365, an increase of 3,845 compared to FY 2013.

The IRS paid 101 awards to whistleblowers totaling $52,281,628. However, reductions in expenditures required by sequestration reduced the whistleblower award payments in 2014 by $3,764,722. The total award amount, before sequestration, represented 16.9% of the total amount IRS collected as a result of whistleblowers’ claims. 
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In a significant pro-whistleblower decision yesterday, the Tax Court in a decision 144 TC 15 (Whistleblower 21276-13W v. IRS) made it clear that the IRS couldn’t deny a whistleblower an award because they filed a request for an award after the IRS had collected the fines and penalties from the targeted business.  The whistleblowers’ extensive cooperation with IRS and law enforcement agents was directly responsible for the IRS collecting a large monetary penalty from the targeted business.  Shortly after the IRS successfully concluded its case against the targeted business the whistleblowers filed a claim for an award under the IRS whistleblower program citing their extensive assistance to the IRS during the investigation.

The lead counsel representing the whistleblower in Tax Court was National Whistleblower Center (NWC) advisor Dean Zerbe of ZFFJ law firm. NWC Executive Director Stephen M. Kohn and NWC General Counsel David K. Colapinto were also counsel for the whistleblowers. This is the first evidentiary trial for tax whistleblowers that has been held by the Tax Court.


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The Wall Street Journal reports that Swiss bank whistleblowers Bradley Birkenfeld and Hervé Falciani are schedule to take part in a panel discussion at the OffshoreAlert Conference in Miami Beach May 3-5.

The panel entitled “Inside the UBS & HSBC Leaks,” will take participants  “inside the UBS and HSBC leaks and discuss issues material to whistleblowing, including the treatment of whistleblowers by law enforcement and tax collection agencies, how the system can be improved, the extent of global tax evasion, and the involvement of the world’s major banks.”
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Washington, D.C. January 21, 2015. The National Whistleblower Center issued a statement today highly critical of the Canadian Offshore Tax Informant Program.

“Unfortunately it is likely to fail,” stated Stephen M. Kohn, the executive director of the National Whistleblower Center.

National Whistleblower Center’s Statement on Canada’s Offshore Tax Informant Program: 
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The National Whistleblower Center’s (NWC) Senior Policy Advisor – Dean Zerbe and his law firm ZFF&J – were recently in Tax Court as the first lawyers to litigate in a hearing whether a whistleblower meets the three-part test of the IRS whistleblower award program. In brief, the three-part test is: 1) the whistleblower provided information to the government; 2) the IRS acted on that information; and, 3) the IRS action resulted in collected proceeds.

While the case remains under seal, the whistleblower was able to show that the IRS denial letter was issued in error and that the whistleblower met the three-part test – in spades. Finally having their day in Tax Court to have the facts brought forward was in of itself a victory for the whistleblower.
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In an editorial published yesterday in Politico Magazine, Senators Ron Wyden and Chuck Grassley criticize the IRS whistleblower program. The editorial, “Will the IRS Ever Listen?” states that the backlog on cases is too long and that the IRS needs to better manage its relationships with whistleblowers.  They point out that 799 whistleblower claims made prior to 2007 remain open.

The Senators made reference to IRS Commissioner John Koskinen’s August 2014 Policy statement, stating they hope his “message is just the beginning of real reforms in the way whistleblowers are treated.” But state that while there has been some success with the IRS whistleblower program that they routinely hear complaints from whistleblowers about how the IRS handles their cases.
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IRS Commissioner John Koskinen issued an August 2014 policy statement expressing his strong support for the work the IRS Whistleblower Office.  We hope that the IRS will act in conformance with this policy statement and aggressively support whistleblowers.

The full text of this policy statement is linked here.

On August 20, 2014,  the IRS Deputy Commissioner for Services and Enforcement, John Dalrymple, released a memo in which he shared the results of a comprehensive review of the IRS Whistleblower Office operating guidelines. The purpose of the review was to improve the timeliness and quality of decisions as the Service evaluates and acts on whistleblower information. 
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By Dean Zerbe, Advisor to NWC and Attorney at Zerbe, Fingeret, Frank & Jadav.

Dean Zerbe

Tax Court in a recent decision – “Whistleblower 10949-13W v. Commissioner of Internal Revenue” – TC Memo 2014-106 (June 4, 2014) made an important ruling favorable to tax whistleblowers (disclosure:  I am counsel for the whistleblower on this case and also benefitted mightily from the work of my colleague Felipe Bohnet-Gomez).  Key is that the Tax Court rejected the IRS argument which at its core is that a whistleblower can’t get an award if the IRS was already aware of the tax issues of the taxpayer.  The Tax Court made clear that if the IRS uses information (information that is material and not just confirming details) provided by the whistleblower in proceeding against a taxpayer (even where the IRS is already aware of the tax issues of the taxpayer) then the whistleblower is entitled to judicial review of an award (ie the whistleblower is potentially eligible for an award under the IRS whistleblower program – Section 7623(b) of the tax code).  The critical statement from the Tax Court is:
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Washington, D.C. May 20, 2014. The National Whistleblower Center Executive Director, Stephen M. Kohn (who also served as one of the attorneys for UBS tax whistleblower Bradley Birkenfeld), issued the following statement regarding the U.S. government’s prosecution of Credit Suisse bank:

“On May 19, 2014 the Swiss bank Credit Suisse AG pleaded guilty to helping wealthy Americans avoid taxes and paid a $2.6 billion fine.  While this was a significant step forward in policing illegal offshore accounts, the prosecution raises a number of troubling issues.”

“Swiss banking giant UBS was prosecuted in 2009.  Despite the fact that UBS’s illegal offshore holdings were twice as large as Credit Suisse’s, UBS paid a fine of only $780 million, two thirds less then the Credit Suisse penalty.  Why did UBS pay such a small penalty in relation to the magnitude of the crimes it committed?”

“The reason is simple. 
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